We recently published a list of 10 Michael Burry Stocks with Huge Upside Potential. In this article, we are going to take a look at where Alibaba Group Holding Limited (NYSE:BABA) stands against other Michael Burry stocks with huge upside potential.
Michael Burry, founder and manager of Scion Asset Management, is best known for predicting and profiting from the housing bubble’s collapse in the mid-2000s. His bold contrarian bet was famously chronicled in the book and film “The Big Short.” Burry’s investment strategy draws heavily from the rigorous market analysis and principles outlined in Benjamin Graham and David Dodd’s 1934 book “Security Analysis.” The book championed the merits of financial statement analysis, highlighting the importance of intrinsic value and structured investment principles.
That said, Burry has never shied away from putting his own distinct stamp on Wall Street’s time-tested principles. By utilizing complex financial tools, such as derivative securities and short-selling, Burry has amassed a fortune, challenging conventional market wisdom. His 2001 Scion Value Fund letter provides a fascinating insight into his contrarian outlook, which prioritizes long-term value over short-term price fluctuations. Burry makes it clear that to achieve significant long-term returns, he is willing to tolerate short-term volatility. He stated:
“I will always choose the dollar bill carrying a wildly fluctuating discount rather than the dollar bill selling for a quite stable premium.”
He also has no qualms about making significant investments in a few stocks that he believes are undervalued, a tactic the investor employed to strengthen Scion’s holdings at the end of 2024.
In the quarter that ended on December 31, 2024 just before DeepSeek’s artificial intelligence breakthrough sparked a $1.3 trillion surge in Chinese tech stocks, Michael Burry offloaded some of his investments in the country’s tech stocks. The moves came amid a period of high volatility for Chinese stocks, when investors appeared to be losing faith in Beijing following the implementation of a stimulus package in late September. The government’s actions triggered a wild rally until early October, though momentum waned due to a property crisis, a poor economic outlook, and dissatisfaction with the scope of fiscal stimulus in the following months.
Our Methodology
For this article, we examined Scion Asset Management’s Q4 2024 13F filings to list down Michael Burry’s stock picks with the highest upside potential. We ranked the companies in ascending order of their upside potential. These equities are also popular among elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An e-commerce platform displaying a wide range of products to customers online.
Alibaba Group Holding Limited (NYSE:BABA)
Scion Asset Management’s Q4 Stake: $ million
Analyst Upside as of May 9: 32.90%
Number of Hedge Fund Holders: 107
Alibaba Group Holding Limited (NYSE:BABA) is a technology and e-commerce company that serves consumers and small business owners. It is also a market leader in digital media, logistics, and cloud computing. Nonetheless, the Chinese company has struggled to develop in recent years due to regulatory hurdles and trade and technology tensions between the United States and China.
On April 14, Barclays reaffirmed its Overweight rating on Alibaba Group Holding Limited (NYSE:BABA), keeping a price target of $180. The firm’s analyst emphasized the rapid expansion of the company’s cloud business, which is projected to continue throughout the year. According to Barclays, cloud margins will likely stay consistent as Alibaba Group Holding Limited (NYSE:BABA) focuses on improving consumer adoption of AI during the industry’s “land grab” phase.
Alibaba Group Holding Limited (NYSE:BABA)’s cloud segment provides AI services such as image and audio recognition, natural language processing, and machine learning platforms. The company’s Qwen AI model has also gained significant popularity. Over 90,000 spin-off models have been developed, and over 290,000 users use its APIs through Alibaba Cloud.
Overall, BABA ranks 5th on our list of Michael Burry stocks with huge upside potential. While we acknowledge the potential for BABA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than BABA but trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
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